Thursday, 20 January 2011

THE economy posted a $14.4-billion balance-of-payments (BOP) surplus in 2010 that was more than twice the level posted a year earlier, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.

The surplus indicated an economy that generated far more foreign-exchange earnings than it spent and bodes well for regulators who are expecting yet another surplus this year.

Officials said the surplus also validates the country’s status as a major recipient of foreign capital from the risk-averse economies in the euro area and the United States looking for income opportunities in emerging markets like the Philippines.

Data show the BOP stood as a surplus of only $6.4 billion last year.

BSP Governor Amando M. Tetangco Jr. earlier had to recast the target surplus twice last year as the volume of foreign funds entering the country accelerated at a rate far more than the monetary authorities had expected.

From target surplus of $3.2 billion, this was raised to $3.7 billion and finally to $8.2 billion around September, when the appetite of foreign fund managers for optimum returns escalated with the increased flow.

This pertained to export growth averaging more or less 34 percent as of November last year, when some of the country’s trade partners reported either a deceleration or outright contraction in output.

The foreign-currency earnings of millions of overseas Filipinos during the period also helped boost the BOP as these aggregated $17.1 billion in only 11 months.

According to Tetangco, the BSP reviewed its forecast model just this year and concluded the surplus state of the BOPs was likely to persist this year.

“We continue to be watchful of developments to see if there is any need to refine our foreign-exchange regulatory environment further or if any adjustments to other policy levels need to be made,” he said.

The BSP is already on its fourth set of easing the rules on foreign- currency transactions to soften the impact of the net inflow of foreign funds and its impact on the local currency the peso.

Tetangco’s deputy, Diwa C. Guinigundo, acknowledged more could be done in this respect should such additional adjustments prove necessary.

Right now any more tweaking of the rules on government foreign- currency transactions, such as the level of forex purchases in the market without having to show documents, is not considered imperative, however, Guinigundo said.

Officials at the British-owned lender HSBC said the peso was bound to strengthen in the months going forward because the net flow of foreign funds from the developed economies to emerging markets in Asia were to persist this year as well.

HSBC assistant vice president Junie Veloso, who heads the bank’s corporate banking, declined to cite a specific number at which the local currency was likely to strengthen this year, but pointed skyward to indicate the net direction.

Such aggregates as foreign direct investments, portfolio or hot money flows, overseas Filipino remittances, earnings generated by the business- process outsourcing sector, export and tourism receipts and others, were all seen moving higher.

“There is a strong bias for the local currency to gain strength this year because export receipts, BPO income, portfolio investment and others are all flowing inward,” Veloso said, without citing the anticipated rate of the peso relative the US dollar.

Earlier, HSBC released the results of a survey on emerging markets, which indicated nine Asian countries as among those economies leading the developed countries in moving the global economy further ahead.

In any case, the BOPs were in surplus half the time last year, beginning with a surplus of $1.23 billion in January, then $2.29 billion in April and the string of surpluses in September, October, November and December of $3.06 billion, $2.73 billion, $3.9 billion and finally $1.22 billion, respectively.

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